OpenAI logo displayed on a phone screen and ChatGPT website displayed on a laptop screen can be seen in this illustrative photo taken on December 5, 2022 in Krakow, Poland.
Jakub Porzycki | Nurphoto | Getty Images
According to a report by Semafor, Microsoft plans to invest $10 billion in OpenAI, the startup behind popular artificial intelligence tool ChatGPT.
The deal is part of a funding round with other involved investors that would value OpenAI at a whopping $29 billion, Semafor reported Tuesday, citing people familiar with the matter.
It’s not clear if the deal went through, but term sheets sent to potential investors indicated the deal should close by the end of 2022, Semafor reported.
Microsoft will reportedly receive a 75% share of OpenAI’s profits until it repays the money for its investment, after which the company would take a 49% stake in OpenAI.
Microsoft and OpenAI were not immediately available for comment when contacted by CNBC.
For the past few weeks, the tech world has been buzzing with chatter about ChatGPT. The tool is a natural language processing model, meaning it’s designed to generate text that looks like it was written by a human.
The AI model, itself a variant of the GPT-3 family of large language models, has been used for everything from developing code to writing college papers.
A bet on ChatGPT could help Microsoft ramp up its efforts in web search, a market dominated by Google. The company’s Bing browser has only a small share of the global search engine market, but there are hopes that the deal could help the company erase Google’s dominance by offering advanced search capabilities.
In December, Morgan Stanley released a report examining whether ChatGPT poses a threat to Google. Brian Nowak, the bank’s senior analyst for Alphabet, wrote that language models could gain market share “and disrupt Google’s position as the entry point for people on the internet.”
OpenAI, founded in 2015 by Silicon Valley entrepreneur Sam Altman, unveiled its ChatGPT to the public at the end of November. Despite optimism about its potential, the project is burning cash due to the overwhelming pressure on its servers resulting from its virality. Five days after OpenAI released ChatGPT, Altman said that the chat research tool has surpassed 1 million users.
Read the full report on the Semafor website.